Leisure facilities continue to close as Covid-19 magnifies insurance crisis

Two years ago this month the Blueway Waterpark opened on Lough Allen in Co Leitrim. Consisting of 1,600sq m of inflatable trampolines, obstacles, slides, logs, bongo blobs, cliff jumps and rope swings, it immediately became a popular attraction with families. Participants navigated the different inflatable obstacles using wetsuits, life-jackets and buoyancy aids.

It reopened on Monday, June 29th, and that week attracted 1,000 visitors, but closed abruptly last Wednesday, July 9th. The catalyst for the sudden closure was the park’s new insurance premium which had gone from €10,000 to €25,000 a year. The excess has gone from €500 to €5,000.

The demand prompted an angry riposte from the owners, local businessmen Kenny Murtagh and Tom Cronin, and Liam McAuliffe from Cork.

"We, as a business, are not willing to continue our operation with the constraints and conditions being asked by the underwriters and remaining insurers servicing the sector," they stated in a post on the waterpark's Facebook page.

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"The elephant in the room is the blatant 'claim culture' and excessive awards that unfortunately still exists in Ireland, where the onus is on a business to prove it is innocence up to two years after an alleged incident.

“When it’s okay for a claimant to notify a business 21 months after an alleged incident, and where solicitors are taking on cases on a no-win no-fee basis, what hope has the leisure industry in Ireland?

“We ask the question –- what hope has the hospitality and leisure industry in Ireland when this is the view of would-be insurers?

“It has become farcical, and unless new legislation is brought to the fore, including protective notification periods for businesses and a cap put on genuine claims (based on severity of the injury), we will have no activity-based parks in Ireland in a very short space of time.”

Mr Murtagh said its original insurer had sold on its book to an insurer in the UK, who had chosen to increase their premium by 250 per cent. “The real killer,” he stated, was the excess which meant they would be liable for the first €5,000 in legal costs even if the claim against them is unsuccessful.

“It’s ridiculous and it will be up to you to prove it didn’t happened. A lot of people are chancers. The legal fees will cost you five grand to start with. Insurance is an outrage,” he said.

Gone to the wall

Other leisure businesses have gone to the wall at a time when demand for staycations has reached unprecedented levels, with most people eschewing foreign travel because of the Covid-19 pandemic.

Fort Lucan, which has been operating as an adventure park since 1993, closed its doors for the year in June, citing the Covid-19 restrictions and high insurance costs as the reasons for the "heartbreaking" decision. However, Fort Lucan is closed only for this year and will reopen in 2021 at the start of its normal season.*

In Clonakilty, Co Cork, Ireland's first rural community bike rental scheme has had to close after Allianz declined to renew its insurance at the end of May.

“We could not get anybody else to insure our bicycle scheme even though we never had a claim or a query or anything in the last four or five years,” said Dena O’Donovan, who ran the scheme along with her brother Tom.

The problem for many leisure operators was the withdrawal last year from the Irish market of the UK-based LeisureInsure, which is underwritten by Axa. It was one of the last insurers in the Irish market providing cover for adventure parks, bouncy castle providers and children’s play centres.

Where Irish operations have been able to secure insurance renewal, it has been mostly through UK operators who are charging multiples of previous premiums.

One adventure park operator, who asked not to be named, said his premium quadrupled from €6,000 to €24,000 this year, amounting to 10 per cent of his total income. He was also obliged to continue paying his €2,000 premiums a month throughout the lockdown.

“They have absolutely 100 per cent refused to suspend the employers’ liability policy even though we had no employees and the public liability policy though we had no customers for the duration of the pandemic,” he said.

Adventure park operators are now in talks with Irish insurers to try and replace the business that used to be done by LeisureInsure.

For the new Government, insurance is a legacy problem it will have to tackle. The issue of insurance reform was addressed at length in the programme for government, though a clause calling for a Cabinet sub-committee to be set up as a matter of urgency was dropped from the final draft.

More energy

Peter Boland of the Alliance for Insurance Reform said the Covid-19 crisis had created a sense of urgency and the new Government would have to demonstrate more energy in trying to deal with the issue.

“We can expect more of this. Insurance was already an existential problem before Covid-19, so Covid-19 has magnified the crisis. Operators were resorting to measures of borrowing money to pay their insurance premium and that facility is no longer available. Any wriggle room is now effectively gone.

“If the Government is expecting the economy to recover through SMEs and for society to recover through community and voluntary groups, insurance reform needs to be resolved this year.”

*This article was amended on August 13^th 2020